As competition in China’s auto sector shifts into higher gear and sales growth slows, makers of premium cars are looking to a new marketing tool – museums.

Vendors in the world’s largest auto market have so far relied on the showroom to push their sales, but premium brand vendors are looking for new ways to show off their products to China’s brand-conscious consumers.

BMW AG, the world’s biggest premium-car maker by sales, Wednesday opened its first Mini brand “experience center” in the world in Shanghai. A day earlier, Daimler AG said it would build a Mercedes-Benz museum in Beijing, its second globally.

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“We are currently facing huge challenges in the automotive industry,” said Boris Weletzky, a BMW China executive for retail and dealer development. As carmakers gear up to launch new models.

“It’s becoming very difficult to differentiate premium car models by product substance alone. Therefore we not only need a strong brand with strong products, we also need a more exciting way to support strong products,” Mr. Weletzky said at a briefing in Shanghai on Thursday evening.

“For us China is the most important strategic market. China is also the market with the highest competition. To be No. 1, we need to develop new things to become attractive to our customers,” he said.

Many German carmakers have museums in their home markets to show off their history to appeal to potential customers. Daimler said more than 5 million people have visited the Mercedes-Benz Museum in Stuttgart since it opened in May 2006.

The Mercedes-Benz culture center in Beijing will feature “striking architecture and provide a forum for cross-cultural dialog,” Hubertus Troska, Daimler’s board member for Greater China said in a statement.

Courtesy of BMW AG

Located at the former Shanghai World Expo site, the Mini experience center, a 17-meter-high building with glass facades, has no obvious sales role. Instead it offers visitors a peek at the company’s high tech models and a glimpse of the story behind the 54-year-old brand.

A Mini Paceman greets visitors at the entrance of the building, a multi-story transparent cube. On the second floor two classic models are displayed to demonstrate the brand’s past and the present, and guides introduce visitors to the history of cars like the Classic Mini and the Mini Baker Street. Mini lifestyle products — outfits, shoes and luggage — can be bought from a retail shop while a top-floor lounge is designed to encourage Mini fans to gather and exchange views about the cars.

Growth in demand for luxury cars in China has fallen amid growing uncertainty about China’s economy and a government crackdown on extravagant spending. In the first half of 2013, Audi AG, the largest premium carmaker in China by sales, reported an 18% gain to 228,139 cars in China, compared with a 38% rise in the same period a year ago. In the same period, BMW’s sales gains in China slowed to 15% from 31%, and Daimler’s were down 0.5% against an 11% gain.

Still, analysts and industry executives remained optimistic about China’s premium-car segment because of a growing number of millionaires and billionaires. Carmakers such as Daimler, Audi and Jaguar Land Rover are introducing more luxury cars in China.

“We want to penetrate the Mini all over China on the solid basis,” said Maximilian Kalbfell, the Mini’s China head, adding the experience center will help boost sales “in the mid-term”.

China is now the fourth largest market for the Mini after the UK, the U.S. and Germany. “China has the potential to be the largest but I think we need sustainable and profitable growth. We need to establish customer orientation. That’s the most important thing to us,” said Mr. Kalbfell.

BMW introduced the Mini in China in 2003 and it sold 16,830 units of the car in the first eight months of this year, a 15% increase from the year earlier period. In China the car is sold between 225,000 yuan (about $36,800) and 500,000 yuan ($82,000) .

BMW has plans to build more experience centers in mega Chinese cities such as Beijing and Guangzhou for the Mini, which targets young, urban professionals, said Mr. Weletzky.

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